Increased vanadium demand from China as a steel strengthener, titanium in the aerospace industry and the emerging battery market have continued to raise vanadium prices in recent years, and could soon lead to a global shortage without an increase in production.

“The forecasts are pretty clear that there should be a long-term shortage where there has been an oversupply for the past 10 years, so the price of vanadium should rise continually over the next five or 10 years,” says Bill Radvak, President and CEO of American Vanadium Corp. (CVE:AVC).

Radvak says the demand is largely being pushed by a new regulation in China implemented on July 1, 2011, requiring vanadium in rebar for all new buildings. Roughly 92 percent of vanadium is used in high-strength, low-alloy steels, four percent in titanium alloys for air fames, jet engines, and tools, while the remaining four percent is used in chemicals as catalysts, sulfuric acid production, and energy mass storage like the vanadium redox battery.

The United States is currently almost completely dependent on imported vanadium from China, Venezuela, South Africa and Russia, while a small percentage comes from spent catalyst, residues from burning coal and heavyoil, by-product of uranium mining, and imported pig iron slag. Radvak says that the opening of the Gibellini project in Nevada focuses on establishing a stronger domestic production of the mineral, projecting 14 million tonnes of vanadium pentoxide per year which would equate 50 percent of US demand or five percent of global demand. Radvak says that with the current permitting process, in a best case scenario American Vanadium could start production by the end of 2012.

The Gibellini Project is not the only US initiative seeking to increase a domestic supply of vanadium, though it is projecting to be one of the biggest. The Bison McKay Project, which is adjacent to Gibellini, currently being developed by Stina Resources LTD. (CVE:SQA), is in the process of verifying their technical report while EMC Metals Corporation’s (TSE:EMC) Carlin Project – also in Nevada – is continuing exploration work.

“The US is really left out in the cold on a lot of different metals. They’re taking a very active role in trying to get much more vertically integrated from raw materials right through to production and vanadium is a place with us that they could play directly and fairly inexpensively to control that whole supply chain,” said Radvak. “[The U.S. currently] does not have what one would consider a secure supply of an important metal.”

“There’s no real replacement out there in those areas for vanadium,” says Radvak.

American Vanadium is also one of several companies trying to establish a supply of vanadium as an electrolyte to be used in the growing grid-scale applications of the vanadium redox battery.

“We’re seeing that the energy storage space is going from something that was interesting and novel a few years ago to today which is on the verge of explosive growth and when that happens vanadiumredoxbatteries are going to be one of the major demands from there,” said Paul Casey, Director of Business Development at American Vanadium.

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VanadiumCorp Resource Inc. (TSXV:VRB) is a vanadium, titanium and iron strategic metals mining company targeting the first large scale primary vanadium producing project in North America. VanadiumCorp holds a 100% interest in two vanadium projects in the mining friendly region of Quebec, one of which is the Company’s flagship project, The Lac Doré. At the current grade of magnetite on both these projects, each 100 Million tonnes of host rock confirmed equates to over 1,000,000,000 LBS of Vanadium Pentoxide (not counting Iron and Titanium credits).

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The long-term outlook for Vanadium is positive and the worlds largest Vanadium producers are confident that the next few years will see a return to robust demand growth. The main growth markets for the metal are the BRIC countries, but demand from Western economies is expected to rise as well. The automotive and aerospace industries are seen as the main catalysts for new growth as manufacturers seek to reduce fuel consumption by creating lighter weight vehicles.

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